US Offers to Lower Limit on Farm Subsidies

US Offers to Lower Limit on Farm Subsidies

GENEVA — The United States is ready to cut its ceiling for trade-distorting farm subsidies to $15-billion (U.S.) a year to help unblock talks for a global trade deal, U.S. Trade Representative Susan Schwab said Tuesday.

The long-awaited offer was contingent on other partners at the World Trade Organization making offers to open up their markets for agricultural and industrial goods, Ms. Schwab said.

The United States currently has a limit on subsidies which stands at more than $48-billion, although actual payments last year were only around $7-billion because soaring food prices meant U.S. farmers were in less need of support.

“This is a major move, taken in good faith with the expectation that others will reciprocate and step forward with improved offers in market acess,” she told reporters.

The United States has come under pressure to announce a ceiling for its farm subsidies, a key part of the WTO’s long-delayed Doha round of negotiations for a global trade deal.

Developing countries say high U.S. subsidies squeeze their farmers out of the market, reducing food supplies and contributing to the recent spike in prices.

Ms. Schwab was speaking to reporters on the second day of a week of talks at the WTO in Geneva to seek a breakthrough on core elements of a Doha deal.

She said actual subsidy payments by the United States had been above $15-billion a year in seven of the last 10 years during which period the average payout was about $17-billion, showing the current offer represented a cut over the decade.

Ms. Schwab also said the U.S. offer was contingent on other WTO countries agreeing not to take legal action to get further cuts to U.S. subsidy levels.

The U.S. offer was immediately dismissed by a senior Indian official, who said $15-billion is not serious and bigger cuts are needed.

“My immediate response is it doesn’t pass the ‘laugh test,’” the senior official, who asked not to be named, told Reuters.

He said the new proposed ceiling was double current actual outlays for U.S. farmers while the United States was asking developing countries to open markets by making real cuts in their actual agricultural and industrial tariffs.